How I lost control of my life and financial situation.
Part 1, giving a kid money.
Anyone else here love to spend money they don’t have? C’mon, you can’t tell me I’m the only one who has late-night binge shopping sessions?!
Although I love me some online shopping (who doesn’t?) I also have complete control over my finances and a savings account to back that up. I mean, of course there are some areas I could improve on but for now it hasn’t posed as an issue for my financial goals – I’ll get more into those in a later blog.
I’d like to share a (lengthy) story of how I actually accumulated over $20,000 in debt not including student loans ($44,000 including it) and how I managed to pay it all off and end up with over $35k in savings.
I feel like some of you could potentially relate to aspects of this story, I know now that a lot of these issues in fact stemmed from lack of accountability but also depression and anxiety.
How It Began:
Real talk – I used to be in debt. A lot of debt (for my standards, anyways.) I was absolutely reckless as a teen and that definitely put various road blocks in my way well into my 20’s. …late 20’s.
I remember the day I turned 18, I went on RBC’s website (who I banked with at the time) and I applied for a credit card – it was safe to say I had no idea what I was doing, I just thought it was the grown-up thing to do, and also who doesn’t love ‘free‘ money?!
It came as an absolute surprise that I was approved for a $5,000 limit credit card with only 11.9% interest rate – even though I didn’t verify my income and I just turned 18. Who cares, I just got access to $5,000!
This is the part where I would love to say that I was 100% responsible with my money and recent credit-fortune, but I would absolutely be lying. In fact, my very first credit purchase was a $2,000 flat screen TV. You know, back in 2008 when we were ditching tube TV’s for 1080p 42″ subpar quality flat screens priced at nearly $2k a piece. It was expensive but hey, my friends thought I was cool because of it and my place was the place to come play video games at.
At the time, I worked a door-to-door sales job that paid me $7.00 an hour more than minimum wage at the time (Here in Canada, minimum wage was $8.00 at the time – currently it’s $14.50) Needless to say, I thought I was rich for my age. I did fairly well keeping up with my minimum payments until I started making poor choices – I started withdrawing money from my credit card at ATM’s at bars and malls without realizing there were penalties for that – I also lost my job and wrote my landlord cheques from my credit card as well to pay rent with.
It didn’t take me long to max out that credit card, I can tell you that now. It was also then that I realized that sometimes credit card limits aren’t actually “limits” and more of a guideline – my next bill was for $5,500 and to my surprise, my bank didn’t just stop me from using it at the supposed $5,000 limit. As soon as you roll over your limit, you start getting charged up to twice the interest rate and you are also now charged an over limit fee which ranges from $25-100 depending on the card/bank. Thankfully, against my knowledge or consent, I was subscribed to an insurance service with my card called “Balance Protector Premium” which was there to help me make payments if I were to lose a job (like I did.) Also spoiler alert, total waste of money.
This service was I believe $65 or $85 monthly tacked on my credit card bill every month, and even when I requested several times to remove said service (shout out to RBC for having their clients best interest – not)
A rep actually called me from RBC to explain to me that my card is over the limit and that I am starting to drown in interest. I explained I had lost my job and had a change in living situations, they seemed sympathetic but also explained that I am the perfect candidate to take advantage of the Balance Protector program I was subscribed to. They gave me instructions on how to call them and request a claim – so I did that. I called the bank, they told me to call Balance Protector Premium company – so I did. They said they couldn’t access my account and sent me back to RBC – who again, said there was a lock on my account and it’s the insurance’s problem, not theirs. I played phone tag with both companies for several months and was just told my account was “locked” yet no one had a solution. Finally, I was told to just fill out claim documents and send them back – they mailed me the documents, I took a few days to fill them out (procrastination at it’s best) and I ended up receiving a rejection notice for my claim.. 4 days after even receiving my forms to fill out – I hadn’t even sent them back yet! I was finally told the reason my account was locked was because I was over the limit – but this service was supposed to be available for those in my situation so it honestly made no sense and I feel like it’s just a scam. Either way, I didn’t have that extra $1,000 to put my credit card under the limit.
I felt it was a joke. Back then, I wasn’t the greatest at handling problems – if there was no simple solution or if it stressed me out, I had this awful habit of shoving it all under a rug or else I’d rip out my hair and eyelashes (trichotillomania FTW.) So I left it – the balance was $6,212 when it hit my collections account – I remember that number well..
I honestly wish I put my care into my financial situation and I wish I was more vocal about what was going on, because that credit amount in my collections just snowballed from there. I felt my credit already took a big hit, I can’t pay it, so what’s the point? I just accepted my fate and assumed it would all just work out. Later that year, a group of friends and I decided to rent a house together. To this day, still one of the best decisions I made – nearly 10 years later – they are still some of my best friends. Though, things were a bit stressful back then – I was between part-time minimum wage jobs back then, or I was in a bad space and just intermittently used the welfare service for several months to help cover rent. We all decided to sign up for a joint RBC account to pay rent from since that was a bank we all used – It was then I learned that ANY account that my name was attached to with RBC, was free game. This account had nothing to do with my personal banking accounts, but since RBC saw money go into it every month (rent) they decided to take large portions of it to put towards my defaulted credit card debt. Not only was that stressful for me, but now my poor financial choices were impacting my room mates / best friends, and my parents – who ended up bailing me out every time this happened. I closed out all my RBC accounts and switched over to a new bank to run away from the issue.
I couldn’t for the life of me budget properly, I couldn’t save money and I made excuses for myself as to why I simply couldn’t (didn’t make enough money, couldn’t afford to, no point, etc.) – I would cancel cellphone accounts and leave the balances to hit collections, I mean hey – I already had my credit card in collections, what’s another account?
I no longer felt remorse for my poor decisions, I didn’t care about my bad habits, I didn’t care about paying my debts, I didn’t care about how it could affect me. (Later on I learned it was also a plethora of mental health illnesses that contributed to those feelings but we will touch on that later.)
I definitely give props to my parents for always supporting me, and to my mom for always bailing me out of these sh*tty situations I always put myself in. Maybe I also knew deep down that if I messed up, I didn’t have to have accountability for my problems because I knew my parents would end up helping? who knows.
Years later, my credit card debt ended up being $14,000 or so with all of the interest and missed payments over the years and I had about 4 other collections accounts opened which made my debt roughly $20,000 total – I was just in my early 20’s at this point. How do I know?
I finally got a job that I liked and held, with room for advancement in the company. I worked at the mall in a cellphone sales kiosk – I liked my boss, I liked my coworkers, I liked working in the mall and I liked the commission money. After years of working for Fido, I started getting a drive to advance further into the company. I opened a new store location with now one of my closest friends, Jen. She was the store manager and I was her number 2 – she basically coached me and prepped me for management and had me taking my career more seriously. She motivated me.
I decided to get a new car instead of my sport old used Hyundai Tiburon (RIP) and I opted for a newer 2012 Ford Focus hatchback, aka the ultimate mom car. I was denied for a loan, I was denied for leasing – I had to have my mom cosign everything with me, because my dumb ass past me didn’t care about future me.
My phone was with Virgin Mobile at the time, I had a terrible plan that was costing me $100 ish per month – where as with Rogers, where I was working, I could have had a better plan for 50% off with my employee discount – I was rejected because of my poor credit. Not only could I not get my own car, I also couldn’t get my own phone, apartment or any other new credit card. All because I refused to accept I had a problem and refused to properly deal with my issues and just put them on the back burner.
Fast forward to 2015 – I had left my job at Rogers and was now a tattoo apprentice – this was the time where I was starting to really grow and think about my future (I was 25 years old.) I was working full time unpaid, living off savings and my parents helping me out during my broke-ass apprentice days. It was not the most glamorous, to say the least. On top of that, I still had to balance my monthly expenses and also purchase all of my own tattoo equipment – thankfully I managed to snag a part time job at Sally’s to bring in some cash flow on the side.
Once I started doing some tattoos (18 months or so in) I started making a little money here and there – I started realizing the importance of dealing with problems and taking control of my life – especially the aspects I had lost control of. I went onto the Equifax website and signed up to get a copy of my credit report – best $25 spent.
I got to see in detail all of my collections accounts, my debts, my missed payments, delinquency status, my credit score (it was baaddd) and every open account I had, every inquiry to my credit I had… it was eye opening, to say the least. It was at that point I decided to form a game plan to pay down this awful debt I wracked up for myself. Before, I would prioritize random spending, fast food and makeup over paying down any debts – that was no more. Every pay cheque from Sally’s went directly to paying off any debt accounts I had – I started small.
How I managed to pay off collections accounts, one at a time:
On your Transunion / Equifax file, it shows the collections accounts as well as the contact number for who holds the account. I decided to call each of them and see if I could work out either a payment plan, or perhaps lower the amount and pay it in one lump sum.
My tip to anyone who is trying to pay off collections accounts, is to start small. Any collection account will stay on your file for 6 years of last reported date of activity.
How did I tackle my debts? Here are some tips:
1. What balances are lowest amount and newest opened collection account?
Mine was a $257.00 Fido account that I forgot to pay the last bill on and forgot about. I called up collections account, paid that $257 – now It’s cleared up.
2. Next was Rogers account – I closed out my internet and home phone and forgot (neglected) to return equipment, I got charged a hefty fee for that that past Dana didn’t care to handle – so I ended up calling up the collections company, and offering them $500.00 flat for the $800-ish amount showing. They accepted, I paid that one off.
3. Virgin Mobile – I stupidly opened a cellphone account for a boyfriend who then ended up leaving me and also leaving me with his phone bill. PRO LIFE TIP: Unless you’ve been dating for YEARS, do NOT sign a contract on your partners behalf and assume financial/credit responsibility for them. A hard pill to swallow – but if someone’s credit is too bad to get their own phone, then maybe that’s a sign they aren’t financially responsible – take it from someone who was in the same boat, and wasn’t responsible.
Anyways – I called them up and cleared up that $600 balance.
4. The big one – My Visa debt
Actually, truth be told – I never paid this balance. I spoke to a consolidation officer in charge of collections accounts, they made me an offer – they would accept one big lump sum payment of $5,500 for my credit card debt, instead of the $14,000 ish showing on my file from interest / missed payments. I was in the process of saving up that $5,000 when I refreshed my Equifax order (6 months later) and realized the RBC Visa card actually fell off my credit file since it was 6 years later! I honestly lucked out with that – though, I will make mention: Just because a collection account falls off your file, doesn’t mean it doesn’t exist. I will never be able to get an RBC credit card again, most likely – which is totally okay.
5. That $3,000 I saved up toward paying off my credit card debt? I put it on my student loan – which brought the loan down to $20,000-ish.
Needless to say – I worked an unpaid tattoo apprenticeship with a part-time, minimum wage job on the side – I did a couple $80 tattoos here and there and tucked that money away, but the point is – I managed to save money and pay down debts even though I was not in a financially strong position, which just goes to show that even if you don’t make much money – you can make it work. If you are determined enough to dig yourself out of debt, you absolutely can and will – it just takes discipline, drive and patience.
Fast Forward to 27 and 28 year old Dana (2017/2018)
The past 2 years, since December 2017 up until Dec 31, 2018 – I signed up for a Capital One Mastercard with only $300 limit, I used it as much as I could and paid the balance off immediately, I managed to pay off large portion of my $20,000 student debt, I made absolute sure to never ever be late on any phone payments (wireless/cable companies are absolutely ruthless.) I got out of my lease with my Ford and traded it in for a 2015 Hyundai Veloster (which I also had to have my dad cosign.) I also moved out with my friend at the time – let’s call her Trish. I was now paying rent, shop rent, shop bills, personal bills, cell phone, buying my own groceries, paying for my car, insurance, and so on. I managed to get myself a TD Visa card with a $1,000 limit (which was huge, considering my credit score used to be under 400 and I was unable to get any credit card prior to this.)
Enter: Current Dana
It is currently March 12, 2019
I can say with absolute pride and confidence:
- I am no longer being rejected for loans, apartment rentals and credit.
- I have absolutely no accounts in collections.
- I have not been late on any payment in the past 2 or so years.
- I have newest iPhone with Rogers, in my own name – as well as my moms phone in my name and my Internet – despite being ‘delinquent’ with Rogers in the past.
- I have 4 credit cards now in my name, 2 of them for business and 2 of them personal.
- I have a ‘Track my spending’ app on my phone which is very handy.
- I have been able to save up for any big purchase I wished to make – new TV, video game consoles, software, camera, iPad, new tattoo equipment, gaming computer setup – you name it.
- I stopped going on pointless emotionally-driven shopping sprees (to some degree, anyways)
- I have control of my online shopping addiction I previously had, and use a reward system when it comes to random purchases.
- I transfer over most money in my cheq. account, to my savings account, leaving only enough to cover upcoming bills.
- I currently have just over $30,000 saved in my TSFA and $2,500 contributed to my Mutual Funds.
- I have brought my credit score from a measly 383, to just over 700.
- I use mostly cash to spend money – I put anything larger than a $20 bill into a lock box and spend only smaller bills. I save my cash up and either use it towards larger purchases or rent, or I throw it into savings.
- I paid off my student loan in full – I made a payment arrangement to pay $1,673.00 per month and finally made my very last OSAP payment in January.
- I just purchased a Tesla Model 3 ($65,000 car) and financed it 100% under my name, locking in a 4% interest rate (opposed to my 6.99% rate I had on my last car even with my dad as co-signer.)
- I have a $25,000 loan available for my business, offered by my bank.
- I never struggle financially – I don’t have to worry about my bills, expenses, food, rent or anything – I plan ahead, put my monthly expense money away and always have a back up fund in case things take a turn for the worst.
I have worked really, really hard to dig myself fully out of debt and start forming a proper savings account. It took me 4.5 years to undo all of the damage past-Dana so recklessly made. I made plenty of poor choices way back when, I refused to take charge of my life, I made excuse after excuse of why I was in debt, why I couldn’t afford my lifestyle, why I couldn’t afford to save or pay down debt and I refused to acknowledge I had messed up and let things go a little too out of hand.
I did my research, I reached out, I formed a plan and stuck to it. It was hard, I was financially strapped for years – I sat out from a lot of events, concerts, trips and events with friends. I made due with the items I had, and I lived off instant noodles for a while. A lot of my friends and even some family members try and chalk up my current situation to “luck” saying that I lucked out in having my business – but in fact, luck is the last thing I owe thanks to. It wasn’t easy to get to where I am now, but honestly? It was worth it. It takes next to no work to make a mess and not deal with it – but it takes a great deal of time and effort to undo the mess created. You just.. have to want to do it.
Be proactive now, take control of your life and your situation – stop blaming circumstance, stop blaming other people and the world for problems that may arise. As soon as you start seeing the errors in your ways and start being accountable, you will flourish and be absolutely financially FREE.
My parents (mainly my mom) had bailed me out of MANY bad situations I landed myself in, she handled my car payments and storage unit fees when I was apprenticing, she would help with my rent when I was younger if I didn’t make enough money and she always supported me. Sometimes we take things and people for granted – had she not have helped me out as much as she did, I have no idea where I would be. I think the fact that my past me’s bratty poor decisions put a heavy strain on my family is also what lit a huge fire under my butt to get my sh*t together. Not only were my bad choices affecting me, but they were now affecting those close to me. For that, I owe my parents the world and I will spend the rest of their lives trying to show them that.
I hope my story somehow helps and if you have any questions, feel free to leave any comments 🙂 I will be posting another blog that has more money-tips in terms of saving and fixing credit. Nothing is more liberating and empowering like being absolutely independent, having everything in your name, knowing all of your monthly expenses will be accounted for and that YOU yourself are the one who is responsible for your success and your future.
I guess to sum it up, I was a huge brat. What else is new?